Header photo source: SF Express.
In the first half of 2024, SF Express posted revenue of RMB 134.41 billion (USD 18.8 billion), reflecting an 8.08% year-on-year growth. It was a much-needed recovery after the turbulence of 2023. But even with this rebound, SF is eager to list on the Hong Kong Stock Exchange (HKEX), refiling its IPO application in June 2024 after the prior one lapsed. It raises a key question: why the rush to go public when the company seems to be on solid financial footing, with RMB 32.52 billion (USD 4.6 billion) in cash and cash equivalents and a 5.4% boost in personal membership accounts, totaling 699 million? What’s pushing SF toward the IPO now?
SF was once the unchallenged heavyweight of China’s private express industry. Its dominance in time-sensitive deliveries, powered by its vast logistics and air freight network, kept it ahead of the pack. In an industry crowded with state-run players, SF was the premium option.
Then e-commerce came along and flipped the market on its head. A fierce price war sent delivery fees plummeting, slashing margins across the sector. SF, with its high-end services, largely dodged the initial blows. By 2020, it controlled less than 10% of the market but still pocketed RMB 7.3 billion (USD 1 billion) in profit. In contrast, competitors like STO Express, YTO Express, ZTO Express, and Yunda dominated over 60% of the market but collectively earned only RMB 7.6 billion (USD 1.1 billion).
But the company’s grip on premium deliveries has loosened. JD Logistics, born out of the e-commerce giant JD.com, is closing in fast. Backed by JD’s digital prowess and its integrated supply chain, JD Logistics has eroded SF’s market share, challenging its monopoly on fast delivery services.
The numbers tell the story: between 2017 and mid-2024, the revenue SF drew from time-sensitive deliveries fell from 65.66% to 44.03%. JD’s rapid build-up has left SF scrambling to adapt.
Meanwhile, SF faces competition on another front. J&T Express, which entered China in 2020 after acquiring LBEX, quickly scaled to a daily delivery volume of 20 million packages, buoyed by backing from Pinduoduo. J&T’s aggressive expansion into rural areas—a strategy counter to SF’s urban-first focus—has placed the two companies in direct competition across key markets.
Pinduoduo’s 2024 move to offer free shipping to remote areas poses an even bigger threat. If this initiative gains traction, SF’s premium positioning could take a hit. Adding to the company’s woes is its subsidiary Hive Box, embroiled in public controversy over late-fee practices. In 2023 alone, Hive Box raked in over RMB 1 billion (USD 140 million) from late fees on 208 million packages, drawing criticism from regulatory bodies like the China Consumers Association for its short grace periods and lack of notifications.
2023 was a tough year for SF. Revenue dipped 3.39% to RMB 258.4 billion (USD 36.2 billion), while the debt-to-asset ratio climbed to 53.37% by year’s end, up from 43.23% at its IPO. Interest expenses also soared, doubling from RMB 900 million (USD 126 million) in 2019 to RMB 2.27 billion (USD 317.8 billion) in 2023. In 2023, SF’s stock plunged from RMB 57.5 (USD 8.1) to RMB 40.4 (USD 5.7), erasing billions in market value.
The company is taking action. In response to its shifting fortunes, SF has launched initiatives aimed at transforming itself from a logistics provider to a solutions-oriented business. This includes the introduction of Fengyu, a large language model designed to enhance operations in marketing, customer service, and delivery.
Even as SF battles on its home turf, it’s casting its gaze abroad. International revenue, which peaked at RMB 48.47 billion (USD 6.8 billion) in 2022, slumped to RMB 25.76 billion (USD 3.6 billion) in 2023. Yet SF has secured more than 40 cross-border logistics projects across Asia in the first half of 2024. Competition in this arena is fierce, with JD Logistics, Cainiao, and ZTO vying for the same global market slice.
SF’s dominance is no longer guaranteed. Its edge in speed and scale is eroding, both at home and internationally. While it was once the undisputed leader in premium services, SF is now navigating a more crowded, complex landscape. The question remains: will technological innovation and global expansion be enough to regain its lost ground?